This paper reviews the economic literature on how family systems respond to changes in resource endowments, outside economic opportunities, the development of markets, and surrounding institutions. On topics where economic contributions are scarce, we also provide insights from other disciplines, family history in particular. We build our review around the distinction between the household conceived as a co-residential unit whose members produce and consume collectively, and the family conceived as a group of co-residential units tied through blood or adoption and sharing rights and obligations, on the other hand.
We first examine the two dimensions of the family from a theoretical standpoint, stressing the mechanisms of transformation of the household on which more theorizing has taken place. We then review the empirical evidence available on these questions. In a third part, keeping in mind that prevailing family forms may be socially inefficient, attention is shifted to the possible role of legal rules in modifying certain characteristics of the family. We review a number of salient studies that have estimated the impact of certain family laws on behaviour patterns that they were intended to change.